distimo-130329-1Hate the freemium model but wonder why so many developers seem to be taking that route these days? Well according to a new study, it seems that a whopping 71% of total iPhone app revenue comes from in-app purchases, usually found on freemium titles. The study was published by Distimo and as you can see in the pie chart above, 24% of app revenue comes from paid apps, with only 5% coming from in-app purchases within paid apps. Based on this it is obvious why developers are starting to favor the freemium model.

The study goes on to break down the revenue by region, and shows that Japan is the country that spends the most on in-app purchases, followed by Germany, UK and the US. For those wondering about the freemium model, it’s basically where developers allow users to download the app free of charge. However to access more advanced features, or in the context of games, to buy gold, items, or equipment to help you progress in the game, it will cost you real money. This ranges from a few cents to a few dollars.

We’ve heard of how kids have unknowingly racked up hundreds, if not thousands of dollars in accidental in-app purchases, as well as see how some developers have made the transition from paid app, to freemium, such as EA with Real Racing where Real Racing 1 and 2 were paid, and Real Racing 3 was free.

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